<PAGE>
To Shareholders
EV Classic Government Obligations Fund had a total return of -0.2% for the six
months ending June 30, 1996. The return was the result of a decline in net asset
value per share from $9.49 on December 31, 1995, to $9.16 on June 30, 1996, and
the reinvestment of $0.31 per share in income dividends. The Fund's return does
not include the effect of the Fund's 1% contingent deferred sales charge on
redeeming shareholders.
For comparison, the Lipper Short-Intermediate U.S. Government fund average -
which measures the average return of funds investing in intermediate-term U.S.
government securities* - had a total return of -0.2% for the same period,
according to Lipper Analytical Services, Inc., an independent mutual fund
monitoring service.
Based on the Fund's most recent dividend and its net asset value per share of
$9.16 on June 30, 1996, the Fund's annualized distribution rate was 6.69%.
On the heels of a strong performance in 1995, the bond market encountered
turbulence in the first six months of 1996. As the economy showed signs of
renewed strength, interest rates edged higher and market sentiment changed
dramatically. The bond market entered 1996 on a positive note, as the Federal
Reserve followed up its December, 1995 credit easing with another such action in
January, lowering its federal funds rate - a key short-term interest rate
barometer - to 5.25%. The Fed actions encouraged speculation among investors
that rates might continue to move lower.
However, that optimism waned in the aftermath of the spring Congressional
testimony by Fed Chairman Alan Greenspan, who suggested that the Fed was less
likely to lower rates further in light of the relatively strong economic data.
Subsequent monthly employment data showed that job creation was indeed running
well above expectations. With little hope remaining for a further rate cut,
market sentiment turned defensive as the period progressed. Increasingly,
investors have looked to the Federal Reserve amid continued speculation that the
Fed will choose to tighten credit in coming months.
The past six months, however difficult for fixed-income investors, provided a
good indication of the strengths of Government Obligations Portfolio in a rising
rate environment. The Portfolio's relatively short duration, with its focus on
seasoned mortgage-backed securities, cushioned its price decline relative to
that of longer-term Treasuries. While past performance is naturally no guarantee
of future results, Government Obligations Portfolio is an attractive investment
alternative for investors seeking a high quality, fixed-income investment with
relatively low price volatility.
- ---------------------------- Sincerely,
/s/ M. Dozier Gardner
[Photo of M. Dozier Gardner]
M. Dozier Gardner
President
- ---------------------------- August 21, 1996
- --------------------------------------------------------------------------------
Fund shares are not guaranteed by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are subject
to investment risks, including possible loss of principal invested.
- --------------------------------------------------------------------------------
*The Fund's shares are not guaranteed or backed by the U.S. government or
its agencies.
<PAGE>
Management Report
An Interview with Susan Schiff, Portfolio Manager of Government Obligations
Portfolio.
Q. SUSAN, THE BOND MARKET WAS UNDER PRESSURE IN THE FIRST SIX MONTHS OF THE
YEAR. HOW DID THE MORTGAGE SECURITIES MARKET FARE?
A. The rising interest rate environment created a difficult climate for the
mortgage-backed securities (MBS) market in the first half of the year.
Nevertheless, the MBS market managed to outperform the Treasury market. There
were several reasons why. First, as interest rates rose, investors grew less
concerned about the effects of principal prepayments. As a result, yield
spreads - the difference in yields between varying types of bonds - tightened
between mortgage securities and Treasury bonds.
Second, corporate bonds and other fixed-income alternatives became relatively
expensive by historical standards, and investors have become increasingly
attracted to the high quality of mortgage securities.
Finally, a few large investment houses recently altered their proprietary
mortgage indices to include a specific weighting of seasoned mortgages. That
focused increased attention on the seasoned sector, benefitting the sector and
the Fund.
- ----------------------
[Photo of Susan Schiff]
- ----------------------
SUSAN SCHIFF
Q. THE FUND WAS AGAIN LESS VOLATILE THAN MANY ALTERNATIVE FIXED-INCOME
INVESTMENTS. TO WHAT DO YOU ATTRIBUTE THAT?
A. As is characteristic of the Fund, we maintained a duration - a measure of
the Fund's responsiveness to interest rates - in the 2.6-to-3.4 year range,
similar to that of a three-to-four-year Treasury. But, because we focus on
the seasoned segment of the mortgage securities market with their relatively
stable prepay rates, the Fund was impacted less by rising interest rates
than was the unseasoned sector of the MBS market. Once again, given its
duration and composition, the Fund performed generally in line with
expectations.
Q. WHY WERE INVESTORS LESS CONCERNED ABOUT PREPAYMENT RATES AS INTEREST RATES
INCREASED?
A. The prepayment rate - the rate at which homeowners pay off their existing
mortgages - is one of the primary concerns within the mortgage securities
market. Typically, homeowners are more likely to prepay their mortgages when
interest rates are declining. When rates rise, as they have so far in 1996,
homeowners are more inclined to retain their present mortgages. As a result,
prepayment rates become less of a concern for investors in mortgage
securities.
Q. YOU MENTIONED THAT MAJOR INDICES ARE NOW INCLUDING A SPECIFIC WEIGHTING FOR
SEASONED MORTGAGES. WHY IS THAT IMPORTANT?
A. The seasoned segment of the MBS market has historically been
underrepresented - and often underpriced - in most mortgage indices. The
inclusion of these bonds in the indices will raise their profile within the
market, as well as improve their pricing and valuation.
Already, we have seen yield spreads narrow somewhat for the seasoned sector.
While there will likely be increased competition for the seasoned mortgages
among institutional investors, the vast size of the MBS market and our own
excellent market resources should continue to give us ample access to this
sector of the market.
Q. WHAT IS YOUR OUTLOOK FOR THE MORTGAGE SECURITIES MARKET?
A. The anecdotal evidence suggests that the economy continues to generate
steady but unspectacular growth. As a result, while job creation has been
fairly impressive, there is relatively little sign of inflation. However,
the Federal Reserve continues to monitor the economy closely. If the Fed
detects inflationary pressure at some point, rates could move higher. Given
the relatively benign economy, the adjustments will probably be fairly mild.
Naturally, there's no guarantee that past trends will be repeated in the
future. But the seasoned segment of the mortgage securities market, with its
stable prepayment rates, should continue to deliver an attractive yield
advantage and good defensive characteristics. In my view, those are good
qualities in today's changing markets.
THE PORTFOLIO'S SEASONED,
MORTGAGE-BACKED SECURITIES
HAVE HELPED CONTRIBUTE
TO ITS RELATIVE SHARE
PRICE STABILITY.
Generic Seasoned
------- --------
Mar-91 5 13.4
Apr-91 6.1 12.8
May-91 7 16.1
Jun-91 6.7 16.2
Jul-91 6.6 16.5
Aug-91 6.2 16.1
Sep-91 5.5 15.2
Oct-91 6.3 15.5
Nov-91 7.8 14.1
Dec-91 10.3 15.4
Jan-92 13.2 15.7
Feb-92 19.7 18.1
Mar-92 26.5 22.4
Apr-92 22.8 22.5
May-92 18.3 22.2
Jun-92 18.1 19.5
Jul-92 19.2 14.2
Aug-92 31.1 16.5
Sep-92 46.9 14.1
Oct-92 52.4 17.3
Nov-92 50.2 17.8
Dec-92 45.5 18.5
Jan-93 29.5 18.1
Feb-93 25.3 15.3
Mar-93 42.3 17.2
Apr-93 58.3 18.2
May-93 61.9 18.7
Jun-93 63 21.4
Jul-93 54.3 22.4
Aug-93 56 21.9
Sep-93 57.2 24.6
Oct-93 58 21.2
Nov-93 62.2 22.6
Dec-93 62.7 27.6
Jan-94 50.9 23.9
Feb-94 43.2 21.1
Mar-94 49.7 23.5
Apr-94 40.7 23.4
May-94 32 23.3
Jun-94 25 20.5
Jul-94 19.5 17.2
Aug-94 20.1 15.9
Sep-94 17.5 14.3
Oct-94 14.1 14.5
Nov-94 12.1 11.8
Dec-94 10.8 13.7
Jan-95 7 10.5
Feb-95 6.3 10.6
Mar-95 7.7 11.1
Apr-95 8 12.4
May-95 13.9 12.7
Jun-95 15.7 12.8
Jul-95 21 13.5
Aug-95 24.6 15.8
Sep-95 19.8 14.4
Oct-95 21.1 14.7
Nov-95 21.2 14.5
Dec-95 23.5 13.2
Jan-96 22.9 12.6
Feb-96 27.3 14.3
Mar-96 29.9 17.2
Apr-96 29.9 17
May-96 24.5 19
Jun-96 17.7 15.2
This chart compares the prepayment rates of the Portfolio's seasoned FNMA
securities with those of unseasoned generic FNMA securities. The data starts at
the Fund's inception in March 1991 and extends through June 1996.
The Headline reads:
"The Portfolio's Seasoned Mortgage Securities Have Helped Contribute to
its Share Price Stability."
- -- The purple line represents the annualized monthly principal prepayment rates
of the Portfolio's seasoned, mortgage-backed securities.
- -- The black line represents the annualized monthly principal prepayment rates
of some generic 30-year FNMA 9% mortgage backed securities.
- -- Source: Lehman Brothers; Bloomberg, L.P.; Eaton Vance Management.
<PAGE>
-------------------------------
EV CLASSIC GOVERNMENT OBLIGATIONS FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
ASSETS:
Investment in Government Obligations Portfolio
(Portfolio), at value (Note 1A) $37,223,032
Receivable for Fund shares sold 56,091
Deferred organization expenses (Note 1D) 10,920
-----------
Total assets $37,290,043
LIABILITIES:
Dividends payable $ 41,968
Payable for Fund shares redeemed 173,146
Payable to affiliate -
Trustees' fees 42
Accrued expenses 20,905
--------
Total liabilities 236,061
-----------
NET ASSETS for 4,043,566 shares of beneficial interest
outstanding $37,053,982
===========
SOURCES OF NET ASSETS:
Paid-in capital $40,842,366
Accumulated net realized loss on investments,
options and financial futures transactions from
Portfolio (computed on the basis of identified cost) (1,987,603)
Unrealized depreciation of investments from
Portfolio (computed on the basis of identified cost) (1,740,367)
Accumulated distributions in excess of net
investment income (60,414)
-----------
Total net assets $37,053,982
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(NOTE 7) ($37,053,982 / 4,043,566 shares of
beneficial interest) $9.16
=====
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the six months ended June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 1,848,937
Expenses allocated from Portfolio (300,498)
-----------
Total investment income $ 1,548,439
Expenses --
Compensation of Trustees not members of the
Administrator's organization (Note 5) $ 79
Custodian fees 1,976
Distribution and service fees (Note 6) 195,494
Printing and postage 17,325
Transfer and dividend disbursing agent fees 16,535
Registration fees 7,481
Legal and accounting services 3,174
Amortization of organization expenses (Note 1D) 2,326
Miscellaneous 5,969
---------
Total expenses 250,359
-----------
Net investment income $ 1,298,080
-----------
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:
Net realized gain (loss) (identified cost basis) --
Investment transactions $(196,997)
Financial futures contracts 183,856
---------
Net realized loss on investments $ (13,141)
Increase in unrealized depreciation of investments (1,411,318)
-----------
Net realized and unrealized loss on
investments from Portfolio $(1,424,459)
-----------
Net decrease in net assets resulting from
operations $ (126,379)
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 1,298,080 $ 2,802,674
Net realized loss on investments
from Portfolio (13,141) (1,360,064)
Change in unrealized appreciation
(depreciation) from Portfolio (1,411,318) 3,760,045
----------- -----------
Net increase (decrease) in net
assets from operations $ (126,379) $ 5,202,655
----------- -----------
Distributions to shareholders --
From net investment income $(1,289,947) $(2,802,674)
In excess of net investment income -- (44,888)
----------- -----------
Total distributions to shareholders $(1,289,947) $(2,847,562)
----------- -----------
Net increase (decrease) in net
assets from Fund share transactions
(Note 3) $(3,567,630) $ 96,447
----------- -----------
Net increase (decrease) in net assets $(4,983,956) $ 2,451,540
NET ASSETS:
At beginning of period 42,037,938 39,586,398
----------- -----------
At end of period (including accumulated
distributions in excess of net investment
income of $60,414 and $68,547,
respectively) $37,053,982 $42,037,938
=========== ===========
The accompanying notes are an integral part of the financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 -----------------------------------------
(UNAUDITED) 1995 1994 1993*
-------------- -------- -------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, beginning of period $ 9.490 $ 8.980 $ 9.940 $10.0000
------- ------- ------- --------
INCOME FROM OPERATIONS:
Net investment income $ 0.306 $ 0.609 $ 0.626 $ 0.107
Net realized and unrealized gain (loss) on investments (0.331) 0.520 (0.876) (0.051)
------- ------- ------- --------
Total income (loss) from operations $(0.025) $ 1.129 $(0.250) $ (0.056)
------- ------- ------- --------
LESS DISTRIBUTIONS:
From net investment income $(0.305) $(0.609) $(0.626) $ (0.107)
In excess of net investment income -- (0.010) (0.084) (0.009)
------- ------- ------- --------
Total distributions $(0.305) $(0.619) $(0.710) $ (0.116)
------- ------- ------- --------
NET ASSET VALUE, end of period $ 9.160 $ 9.490 $ 8.980 $ 9.940
======= ======= ======= ========
TOTAL RETURN(2) (0.20%) 12.94% (2.54)% 0.34%
RATIOS/SUPPLEMENTAL DATA:
Ratio of interest expense to average net assets(1) 0.71%+ 0.71% 0.57% 0.54%+
Ratio of other expenses to average net assets(1) 2.11%+ 2.11% 2.15% 2.31%+
Ratio of net investment income to average net assets 6.64%+ 6.57% 6.60% 5.45%+
Net assets, end of period (000's omitted) $37,054 $42,038 $39,586 $17,441
<FN>
+Computed on an annualized basis.
(1)Includes the Fund's share of Government Obligations Portfolio's allocated expenses.
(2)Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value
on the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at the net
asset value on the payable date. Total return is not computed on an annualized basis.
*For the period from the start of business, November 1, 1993, to December 31, 1993.
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
---------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Classic Government Obligations Fund (the Fund) is a diversified entity of the
type commonly known as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund is a series of Eaton Vance Mutual Funds Trust
(formerly Eaton Vance Government Obligations Trust). The Fund invests all of its
investable assets in interests in the Government Obligations Portfolio (the
Portfolio), a New York Trust, having the same investment objective as the Fund.
The value of the Fund's investment in the Portfolio reflects the Fund's
proportionate interest in the net assets of the Portfolio (7.8% at June 30,
1996). The performance of the Fund is directly affected by the performance of
the Portfolio. The financial statements of the Portfolio, including the
portfolio of investments, are included elsewhere in this report and should be
read in conjunction with the Fund's financial statements. The following is a
summary of significant accounting policies consistently followed by the Fund in
the preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
A. INVESTMENT VALUATION -- Valuation of securities by the Portfolio is discussed
in Note 1 of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report.
B. INCOME -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and accrued
expenses of the Fund.
C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments, option and financial futures transactions.
Accordingly, no provision for federal income or excise tax is necessary. At
December 31, 1995, the Fund, for federal income tax purposes, had a capital loss
carryover of $2,081,341, which will reduce the Fund's taxable income arising
from future net realized gain on investment transactions, if any, to the extent
permitted by the Internal Revenue Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to relieve the
Fund of any liability for federal income or excise tax. Such capital loss
carry-overs will expire on December 31, 2001 ($32,316), December 31, 2002
($1,822,648) and December 31, 2003 ($226,377).
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Fund in connection
with its organization are being amortized on the straight-line basis over five
years.
E. USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates.
F. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
June 30, 1996 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, relfect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
- --------------------------------------------------------------------------------
(2) DISTRIBUTIONS TO SHAREHOLDERS
The net income of the Fund is determined daily and substantially all of the net
income so determined is declared as a dividend to shareholders of record at the
time of declaration. Distributions are paid monthly. Distributions of allocated
realized capital gains, if any, are made at least annually. Shareholders may
reinvest capital gain distributions in additional shares of the Fund at the net
asset value as of the ex-dividend date. Distributions are paid in the form of
additional shares or, at the election of the shareholder, in cash. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis. Generally accepted accounting principles require that only distributions
in excess of tax basis earnings and profits be reported in the financial
statements as a return of capital. Differences in the recognition or
classification of income between the financial statements and tax earnings and
profits which result in over-distributions for financial statement purposes only
are classified as distributions in excess of net investment income or
accumulated net realized gains. Permanent differences between book and tax
accounting relating to distributions are reclassified to paid-in capital.
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
SIX MONTHS ENDED
JUNE 30, 1996 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1995
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
Sales 421,290 $ 3,907,774 1,676,016 $15,439,473
Issued to shareholders
electing to receive
payments of distribution
in Fund shares 78,816 730,367 176,799 1,641,022
Redemptions (886,090) (8,205,771) (1,830,541) (16,984,048)
-------- ----------- ---------- -----------
Net increase
(decrease) (385,984) $(3,567,630) 22,274 $ 96,447
======== =========== ========== ============
- --------------------------------------------------------------------------------
(4) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio for the six
months ended June 30, 1996 aggregated $4,196,127 and $9,427,754, respectively.
- --------------------------------------------------------------------------------
(5) TRANSACTIONS WITH AFFILIATES
Eaton Vance Management (EVM) serves as the administrator of the Fund, but
receives no compensation. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services. See
Note 3 of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report. Except as to Trustees of the Fund and the Portfolio
who are not members of EVM's organization, officers and Trustees receive
remuneration for their services to the Fund out of such investment adviser fee.
Certain of the officers and Trustees of the Fund and Portfolio are officers and
directors/trustees of the above organizations (Note 6).
- --------------------------------------------------------------------------------
(6) DISTRIBUTION PLAN
The Fund has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan requires the Fund to pay the
principal underwriter, Eaton Vance Distributors, Inc. (EVD) amounts equal to
1/365 of 0.75% of the Fund's daily net assets, for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no outstanding
Uncovered Distribution Charges, which are equivalent to the sum of (i) 6.25% of
the aggregate amount received by the Fund for shares sold plus, (ii)
distribution fees calculated by applying the rate of 1% over the prevailing
prime rate to the outstanding balance of Uncovered Distribution Charges of EVD,
reduced by amounts theretofore paid to EVD. The amount payable to EVD with
respect to each day is accrued on such day as a liability of the Fund and,
accordingly, reduces the Fund's net assets. The Fund paid or accrued $146,621 to
EVD for the six months ended June 30, 1996, representing 0.75% (annualized) of
average daily net assets. At June 30, 1996, the amount of Uncovered Distribution
Charges of EVD calculated under the Plan was approximately $7,170,000.
In addition, the Plan permits the Fund to make monthly payments of service
fees to the Principal Underwriter in amounts not expected to exceed 0.25% of the
Fund's average daily net assets for any fiscal year. The Trustees have initially
implemented the Plan by authorizing the Fund to make monthly service fee
payments to the Principal Underwriter in amounts not expected to exceed 0.25% of
the Fund's average daily net assets for any fiscal year. The Fund paid or
accrued service fees to or payable to EVD for the six months ended June 30,
1996, in the amount of $48,873. EVD makes monthly service fee payments to
Authorized Firms in amounts anticipated to be equivalent to 0.25%, annualized,
of the assets maintained in the Fund by their customers. On sales of shares made
on January 30, 1995 and thereafter, EVD currently expects to pay to an
Authorized Firm a service fee at the time of sale equal to 0.25% of the purchase
price of the shares sold by such Firm and monthly payments of service fees in
amounts not expected to exceed 0.25% per annum of the Funds' average daily net
assets based on the value of Fund shares sold by such Firm and remaining
outstanding for at least one year. During the first year after a purchase of
Fund shares, EVD will retain the service fee as reimbursement for the service
fee payment made to the Authorized Firm at the time of sale. Service fee
payments are made for personal services and/or the maintenance of shareholder
accounts. Service fees paid to EVD and Authorized Firms are separate and
distinct from the sales commissions and distribution fees payable by the Fund to
EVD, and as such are not subject to automatic discontinuance when there are no
outstanding Uncovered Distribution Charges of EVD.
Certain officers and Trustees of the Fund are officers or directors of EVD.
- --------------------------------------------------------------------------------
(7) CONTINGENT DEFERRED SALES CHARGES
For shares purchased on or after January 30, 1995, a contingent deferred sales
charge (CDSC) of 1% is imposed on any redemption of Fund shares made within one
year of purchase. Generally, the CDSC is based upon the lower of the net asset
value at date of redemption or date of purchase. No charge is levied on shares
acquired by reinvestment of dividends or capital gains distributions. No CDSC is
levied on shares which have been sold to EVD or its affiliates or to their
respective employees or clients. CDSC charges are paid to EVD to reduce the
amount of Uncovered Distribution Charges calculated under the Funds Distribution
Plan. CDSC received when no Uncovered Distribution Charges exist will be
credited to the Fund. For the six months ended June 30, 1996, EVD received
approximately $4,700 of CDSC paid by shareholders.
<PAGE>
------------------------------------
GOVERNMENT OBLIGATIONS PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
(UNAUDITED)
- --------------------------------------------------------------------------
MORTGAGE PASS-THROUGHS - 95.6%
- --------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.
PARTICIPATION CERTIFICATES:
4.5s, with maturity at 2000 $ 76,216 $ 75,515
4.75s, with various maturities to 2002 51,701 49,921
5s, with various maturities to 2003 683,625 663,275
5.25s, with various maturities to 2005 339,457 330,226
5.5s, with various maturities to 2011 1,443,309 1,412,270
5.75s, with maturity at 1998 48,704 48,397
6s, with various maturities to 2022 3,875,805 3,791,941
6.25s, with various maturities to 2013 894,471 880,315
6.5s, with various maturities to 2022 17,222,027 17,036,324
6.75s, with various maturities to 2011 9,413,781 9,387,830
7s, with various maturities to 2019 15,213,673 15,240,027
7.25s, with maturity at 2003 1,681,639 1,701,328
7.5s, with various maturities to 2019 18,627,494 18,894,615
7.75s, with various maturities to 2018 3,945,276 4,013,788
8s, with various maturities to 2026 23,936,241 24,496,191
8.25s, with various maturities to 2011 14,164,675 14,671,294
8.5s, with various maturities to 2024 26,636,612 27,639,102
8.75s, with various maturities to 2014 3,467,252 3,624,720
9s, with various maturities to 2020 9,193,261 9,663,744
9.25s, with various maturities to 2010 1,397,127 1,469,147
9.5s, with various maturities to 2016 1,205,494 1,277,484
10s, with various maturities to 2017 254,005 273,346
11s, with various maturities to 2019 2,515,577 2,762,146
12s, with various maturities to 2019 1,972,072 2,215,672
12.25s, with various maturities to 2019 3,874,545 4,384,844
12.5s, with various maturities to 2019 12,381,572 14,093,930
12.75s, with various maturities to 2015 1,723,639 1,964,522
13s, with various maturities to 2019 4,613,565 5,305,755
13.25s, with various maturities to 2019 1,304,427 1,506,962
13.5s, with various maturities to 2015 5,053,097 5,791,955
13.75s, with various maturities to 2014 100,265 115,714
14s, with various maturities to 2016 2,902,159 3,379,941
14.5s, with various maturities to 2014 267,986 315,517
14.75s, with maturity at 2010 988,292 1,159,863
15s, with various maturities to 2013 1,159,831 1,396,994
15.25s, with maturity at 2012 200,382 243,880
15.5s, with various maturities to 2012 256,629 309,581
16s, with maturity at 2012 199,767 245,828
16.25s, with various maturities to 2012 266,204 328,154
------------
$202,162,058
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
MORTGAGE BACKED SECURITIES:
0.25s, with maturity at 2014 $ 252,251 $ 206,138
3.5s, with maturity at 2007 147,896 133,184
4.5s, with maturity at 1999 8,352 8,151
5s, with various maturities to 2017 1,107,289 1,055,420
5.25s, with various maturities to 2006 312,252 301,707
5.5s, with various maturities to 2006 920,029 905,511
5.75s, with maturity at 2003 180,847 177,369
6s, with various maturities to 2010 20,996,621 20,516,586
6.25s, with various maturities to 2007 619,196 610,385
6.5s, with various maturities to 2017 6,000,241 5,927,217
6.75s, with various maturities to 2007 1,215,111 1,209,923
7s, with various maturities to 2018 7,458,742 7,469,864
7.25s, with various maturities to 2017 2,104,500 2,118,493
7.5s, with various maturities to 2020 9,021,507 9,138,703
7.75s, with various maturities to 2008 1,671,032 1,702,921
8s, with various maturities to 2017 26,807,295 27,478,737
8.25s, with various maturities to 2020 13,700,154 14,180,706
8.5s, with various maturities to 2020 21,356,697 22,220,188
8.75s, with various maturities to 2017 1,483,911 1,558,292
9s, with various maturities to 2020 9,350,499 9,877,869
9.25s, with maturity to 2010 2,610,557 2,764,526
9.5s, with maturity at 2009 302,064 324,279
9.75s, with maturity at 2019 405,435 435,519
11s, with maturity at 2010 38,107 41,786
11.75s, with various maturities to 2015 2,413,146 2,709,251
12s, with various maturities to 2020 6,199,563 6,969,544
12.25s, with maturity at 2011 1,026,630 1,161,238
12.5s, with various maturities to 2021 9,834,957 11,254,647
12.75s, with various maturities to 2014 1,817,861 2,088,095
13s, with various maturities to 2019 8,038,583 9,226,322
13.25s, with various maturities to 2015 2,425,923 2,826,699
13.5s, with various maturities to 2015 4,044,538 4,688,853
13.75s, with various maturities to 2014 42,072 48,904
14s, with various maturities to 2014 1,017,222 1,197,914
14.25s, with maturity at 2014 364,159 431,970
14.5s, with various maturities to 2014 238,784 283,369
14.75s, with maturity at 2012 4,590,936 5,478,089
15s, with various maturities to 2013 3,750,652 4,471,705
15.5s, with maturity at 2012 1,098,107 1,341,837
15.75s, with maturity at 2011 34,951 42,260
16s, with maturity at 2012 418,791 518,080
------------
$185,102,251
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
MORTGAGE BACKED SECURITIES:
5.5s, with maturity at 1999 $ 51,893 $ 51,437
6.5s, with maturity at 2002 578,415 573,846
7.25s, with various maturities to 2022 4,439,272 4,419,115
7.5s, with maturity at 2017 1,090,447 1,095,456
8s, with various maturities to 2017 17,331,272 17,766,581
8.25s, with maturity at 2008 593,169 616,268
8.5s, with various maturities to 2018 4,880,292 5,088,542
9s, with various maturities to 2016 5,984,942 6,307,475
12s, with various maturities to 2015 4,102,088 4,653,494
12.5s, with various maturities to 2015 2,283,730 2,631,062
13s, with various maturities to 2014 1,382,625 1,613,099
13.5s, with various maturities to 2013 415,941 488,385
14s, with maturity at 2015 212,781 249,109
14.5s, with various maturities to 2014 514,293 608,930
15s, with various maturities to 2013 934,134 1,117,828
16s, with various maturities to 2012 428,999 525,138
------------
$ 47,805,765
------------
COLLATERALIZED MORTGAGE OBLIGATIONS:
Federal Home Loan Mtg. Corp.
Series 1327-F, 7.5%, due 2003,
Collateral 100% FHLMC PC $ 5,027,000 $ 5,077,275
Federal Home Loan Mtg. Corp.
Series 1058-F, 8.0%, due 2004,
Collateral 100% FHLMC PC 731,569 735,341
Federal Home Loan Mtg. Corp.
Series 1188-GC, 7.5%, due 2019,
Collateral 100% FHLMC PC 10,000,000 9,906,250
Federal National Mtg. Association
Series 93-73E, 6.35%, due 2019
Collateral 100% FNMA MBS 3,000,000 2,857,500
Guaranteed Mtg. Corp. III Series H2,
9%, due 2015, Collateral 100% FNMA MBS $ 724,215 $ 727,327
Salomon Brothers Mortage Securities II,
Inc. Series III, Class Z, 11.50%,
due 2015, Collateral 100%
GNMA/FNMA MBS 1,773,158 1,939,668
------------
$ 21,243,361
------------
TOTAL MORTGAGE PASS-THROUGHS
(identified cost, $455,768,443) $456,313,435
------------
- --------------------------------------------------------------------------
UNITED STATES TREASURY BONDS - 16.0%
- --------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------
U.S. Treasury Bond, 12s, 8/15/13++ $50,000,000 $ 70,515,650
U.S. Treasury Bond, 7.125s, 2/15/23+ 6,000,000 6,065,628
------------
TOTAL UNITED STATES TREASURY BONDS
(identified cost, $67,368,569) $ 76,581,278
------------
- --------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 0.3%
- --------------------------------------------------------------------------
Banque National de Paris Cayman Time-
Deposit, 5.375%, 7/1/96 at amortized
cost $ 1,600,000 $ 1,600,000
------------
TOTAL INVESTMENTS - 111.9%
(identified cost, $524,737,012) $534,494,713
OTHER ASSETS, LESS LIABILITIES - (11.9%) (57,005,194)
------------
NET ASSETS - 100% $477,489,519
============
+Collateral for financial futures contracts held at June 30, 1996 (See Note 7).
++A portion of this security is on loan at June 30, 1996 (See Note 5).
The accompanying notes are an integral part
of the financial statements
<PAGE>
------------------------
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$524,737,012) $534,494,713
Cash 4,303
Receivable for investments sold 1,395,756
Interest receivable 6,151,113
Deferred organization expenses (Note 1H) 8,873
------------
Total assets $542,054,758
LIABILITIES:
Payable for investments purchased $ 5,546,951
Payable for daily variation margin on open
financial futures contracts (Notes 1G) 442,416
Liability for collateral received for securities
loaned (Note 5) 58,467,600
Payable to affiliate --
Trustees' fees 4,796
Accrued expenses 103,476
-----------
Total liabilities 64,565,239
------------
NET ASSETS applicable to investors' interest in Portfolio $477,489,519
============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $468,059,857
Unrealized appreciation of investments and
financial futures contracts
(computed on the basis of identified cost) 9,429,662
------------
Total $477,489,519
============
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the Six Months Ended June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest income -- $ 23,187,139
Expenses --
Investment adviser fee (Note 3) $ 1,854,230
Compensation of Trustees not members of the
Administrator's organization (Note 3) 10,064
Interest expense (Note 5) 1,732,885
Custodian fee 116,413
Legal and accounting services 22,940
Amortization of organization expenses (Note 1H) 1,900
Miscellaneous 29,143
------------
Total expenses 3,767,575
------------
Net investment income $ 19,419,564
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) (identified cost
basis) --
Investment transactions $ (2,480,208)
Financial futures contracts 2,315,313
------------
Net realized loss on investments $ (164,895)
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $(17,713,327)
Financial futures contracts 246,029
------------
Change in unrealized depreciation of
investments (17,467,298)
------------
Net realized and unrealized loss on
investments $(17,632,193)
------------
Net increase in net assets resulting from operations $ 1,787,371
============
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 19,419,564 $ 41,114,428
Net realized loss on investments (164,895) (15,704,668)
Change in unrealized appreciation
(depreciation) of investments (17,467,298) 44,867,799
------------ ------------
Net increase in net assets from
operations $ 1,787,371 $ 70,277,559
------------ ------------
Capital transactions --
Contributions $ 32,089,492 $ 95,964,004
Withdrawals (78,176,249) (160,122,171)
------------ ------------
Decrease in net assets resulting from
capital transactions $(46,086,757) $(64,158,167)
------------ ------------
Total increase (decrease) in net assets $(44,299,386) $ 6,119,392
NET ASSETS:
At beginning of period 521,788,905 515,669,513
------------ ------------
At end of period $477,489,519 $521,788,905
============ ============
- ------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 --------------------------------------
(UNAUDITED) 1995 1994 1993*
----------- ------ ------ ------
<S> <C> <C> <C> <C>
RATIOS (As a percentage of average net assets):
Interest expense 0.70%+ 0.71% 0.56% 0.63%+
Other expenses 0.83%+ 0.82% 0.80% 0.86%+
Net investment income 7.98%+ 7.82% 8.03% 8.46%+
PORTFOLIO TURNOVER 4% 19% 35% 42%
<FN>
+Computed on an annualized basis.
*For the period from the start of business, October 28, 1993, to December 31, 1993.
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
---------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Government Obligations Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940 as a diversified open-end investment company
which was organized as a trust under the laws of the State of New York in 1992.
The Declaration of Trust permits the Trustees to issue beneficial interests in
the Portfolio. The following is a summary of significant accounting policies of
the Portfolio. The policies are in conformity with generally accepted accounting
principles.
A. INVESTMENT VALUATIONS -- Mortgage backed, "pass-through" securities are
valued using a matrix pricing system which takes into account closing bond
valuations, yield differentials, anticipated prepayments, and interest rates.
Debt securities (other than mortgage backed, "pass-through" securities) are
normally valued at the mean between the latest available bid and asked prices
for securities for which the over-the-counter market is the primary market. Debt
securities may also be valued on the basis of valuations furnished by a pricing
service. Options are valued at last sale price on a U.S. exchange or board of
trade or, in the absence of a sale, at the mean between the last bid and asked
price. Financial futures contracts listed on commodity exchanges are valued at
closing settlement prices. Securities for which there is no such quotation or
valuation are valued at fair value using methods determined in good faith by or
at the direction of the Trustees. Short-term obligations having remaining
maturities of less than 60 days are valued at amortized cost, which approximates
value.
B. INCOME -- Interest income is determined on the basis of interest accrued and
discount earned, adjusted for amortization of discount when required for federal
income tax purposes.
C. GAINS AND LOSSES FROM SECURITY TRANSACTIONS -- For book purposes, gains or
losses are not recognized until disposition. For federal tax purposes, the
Portfolio has elected, under Section 1092 of the Internal Revenue Code, to
utilize mixed straddle accounting for certain designated classes of activities
involving options and financial futures contracts in determining recognized
gains or losses. Under this method, Section 1256 positions (financial futures
contracts and options on investments or financial futures contracts) and
non-Section 1256 positions (bonds, etc.) are marked-to-market on a daily basis
resulting in the recognition of taxable gains or losses on a daily basis. Such
gains or losses are categorized as short-term or long-term based on aggregation
rules provided in the Code.
D. INCOME TAXES -- The Portfolio is treated as a partnership for federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since some of the
Portfolio's investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio normally must
satisfy the applicable source of income and diversification requirements (under
the Code) in order for its investors to satisfy them. The Portfolio will
allocate at least annually among its investors each investors' distributive
share of the Portfolio's net investment income, net realized capital gains, and
any other items of income, gain, loss, deduction or credit.
E. WRITTEN OPTIONS -- Upon the writing of a call or a put option, an amount
equal to the premium received by the Portfolio is included in the Statement of
Assets and Liabilities as a liability. The amount of the liability is
subsequently marked-to-market to reflect the current value of the option written
in accordance with the Portfolio's policies on investment valuations discussed
above. Premiums received from writing options which expire are treated as
realized gains. Premiums received from writing options which are exercised or
are closed are added to or offset against the proceeds or amount paid on the
transaction to determine the realized gain or loss. If a put option is
exercised, the premium reduces the cost basis of the securities purchased by the
Portfolio. The Portfolio, as writer of an option, may have no control over
whether the underlying securities may be sold (call) or purchased (put) and, as
a result, bears the market risk of an unfavorable change in the price of the
securities underlying the written option.
F. PURCHASED OPTIONS -- Upon the purchase of a call or put option, the premium
paid by the Portfolio is included in the Statement of Assets and Liabilities as
an investment. The amount of the investment is subsequently marked-to-market to
reflect the current market value of the option purchased, in accordance with the
Portfolio's policies on investment valuations discussed above. If an option
which the Portfolio has purchased expires on the stipulated expiration date, the
Portfolio will realize a loss in the amount of the cost of the option. If the
Portfolio enters into a closing sale transaction, the Portfolio will realize a
gain or loss, depending on whether the sales proceeds from the closing sale
transaction are greater or less than the cost of the option. If the Portfolio
exercises a put option, it will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Portfolio exercises a call option, the cost of
the security which the Portfolio purchases upon exercise will be increased by
the premium originally paid. For tax purposes, the Portfolio's options are
generally subject to the mixed straddle rules described in Note 1C, and
unrealized gains or losses are recognized on a daily basis.
G. FINANCIAL FUTURES CONTRACTS -- Upon entering into a financial futures
contract, the Portfolio is required to deposit an amount ("initial margin")
either in cash or securities equal to a certain percentage of the purchase price
indicated in the financial futures contract. Subsequent payments are made or
received by the Portfolio ("margin maintenance") each day, dependent on the
daily fluctuations in the value of the underlying securities, and are recorded
for book purposes as unrealized gains or losses by the Portfolio.
If the Portfolio enters into a closing transaction, the Portfolio will
realize, for book purposes, a gain or loss equal to the difference between the
value of the financial futures contract to sell and the financial futures
contract to buy. The Portfolio's investment in financial futures contracts is
designed only to hedge against anticipated future changes in interest or
currency exchange rates. Should interest or currency exchange rates move
unexpectedly, the Portfolio may not achieve the anticipated benefits of the
financial futures contracts and may realize a loss. For tax purposes, such
futures contracts are generally subject to the mixed straddle rules described in
Note 1C, and unrealized gains or losses are recognized on a daily basis.
H. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
I. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold.
J. USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates.
K. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
June 30, 1996 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
- --------------------------------------------------------------------------------
(2) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term obligations,
aggregrated $23,906,435 and $53,705,085, respectively.
- --------------------------------------------------------------------------------
(3) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee, computed at the monthly rate of 0.0625% (0.75% per
annum) of the Portfolio's average daily net assets up to $500 million and at
reduced rates as daily net assets exceed that level, is earned by Boston
Management and Research (BMR), a wholly-owned subsidiary of Eaton Vance
Management (EVM), as compensation for management and investment advisory
services rendered to the Portfolio. For the six months ended June 30, 1996, the
fee was equivalent to 0.74% (annualized) of the Portfolio's average net assets
for such period and amounted to $1,854,230. Except as to Trustees of the
Portfolio who are not members of EVM's or BMR's organization, officers and
Trustees receive remuneration for their service to the Portfolio out of such
investment adviser fee. Trustees of the Portfolio that are not affiliated with
the Investment Adviser may elect to defer receipt of all or a percentage of
their annual fees in accordance with the terms of the Trustees Deferred
Compensation Plan. For the six months ended June 30, 1996, no significant
amounts have been deferred. Certain of the officers and Trustees of the
Portfolio are officers and directors/trustees of the above organizations.
- --------------------------------------------------------------------------------
(4) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by BMR and
EVM in a $120 million unsecured line of credit agreement with a bank. The line
of credit consists of a $20 million committed facility and an $100 million
discretionary facility. Interest is charged to each portfolio or fund based on
its borrowings at an amount above either the bank's adjusted certificate of
deposit rate, a variable adjusted certificate of deposit rate, or a federal
funds effective rate. In addition, a fee computed at an annual rate of 1/4 of 1%
on the $20 million committed facility and on the daily unused portion of the
$100 million discretionary facility is allocated among the participating
portfolios and funds at the end of each quarter. The average daily loan balance
for the six months ended June 30, 1996 was $632,357 and the average interest
rate was 7.05%. The maximum borrowing outstanding at any time during the six
months ended June 30, 1996 was $6,289,000.
- --------------------------------------------------------------------------------
(5) SECURITIES LENDING AGREEMENT
The Portfolio has established a securities lending agreement with a broker in
which the Portfolio lends portfolio securities to the broker in exchange for
collateral consisting of either cash or U.S. government securities. Under the
agreement, the Portfolio continues to earn interest on the securities loaned. If
the collateral received is U.S. government securities, the Portfolio will also
receive from the broker an additional loan premium fee computed as a varying
percentage of the market value of the securities loaned. If the collateral
received is cash, the Portfolio may invest the cash and receive any interest on
the amount invested but it must also pay the broker a loan rebate fee computed
as a varying percentage of the collateral received. The Portfolio did not
receive any loan premium fee during the six months ended June 30, 1996, but did
incur $1,709,685 of loan rebate fees which have been included in interest
expense. The maximum liability for cash collateral received for securities
loaned at any month end during the six months ended June 30, 1996, was
$58,467,600.
- --------------------------------------------------------------------------------
(6) FEDERAL INCOME TAX BASIS OF INVESTMENT
The cost and unrealized appreciation/depreciation in the value of investment
securities owned at June 30, 1996, as computed on a federal income tax basis,
were as follows:
Aggregate cost $535,512,474
============
Gross unrealized depreciation $ 6,086,517
Gross unrealized appreciation 5,068,756
------------
Net unrealized depreciation $ 1,017,761
============
- --------------------------------------------------------------------------------
(7) FINANCIAL INSTRUMENTS
The Portfolio regularly trades in financial instruments with off-balance sheet
risk in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include written
options, forward foreign currency exchange contracts, and financial futures
contracts and may involve, to a varying degree, elements of risk in excess of
the amounts recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment the Fund has in particular classes of financial instruments and does
not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
A summary of obligations under these financial instruments at June 30, 1996 is
as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
FUTURES CONTRACT APPRECIATION
EXPIRATION DATE CONTRACTS POSITION (DEPRECIATION)
--------------- --------- -------- --------------
<S> <C> <C> <C> <C>
9/96 425 U.S. Treasury Five Year Note Futures Short $ (22,116)
9/96 200 U.S. Treasury Long Bond Futures Short $(307,650)
9/96 200 U.S. Treasury Ten Year Note Futures Short $ 1,727
---------
$(328,039)
=========
</TABLE>
At June 30, 1996, the Fund had sufficient cash and/or securities to cover margin
requirements on any open futures contracts.
<PAGE>
<TABLE>
<CAPTION>
-------------------------
INVESTMENT MANAGEMENT
<S> <C> <C>
EV CLASSIC OFFICERS TRUSTEES
GOVERNMENT
OBLIGATIONS FUND M. DOZIER GARDNER DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight Partners, Inc.
Boston, MA 02110 Chairman, Newspapers of
JAMES B. HAWKES New England, Inc.
Vice President, Trustee
SAMUEL L. HAYES, III
H. DAY BRIGHAM, JR. Jacob H. Schiff Professor of
Vice President Investment Banking, Harvard
University Graduate School of
WILLIAM H. AHERN, JR. Business Administration
Vice President
NORTON H. REAMER
MICHAEL B. TERRY President and Director,
Vice President United Asset Management
Corporation
JAMES L. O'CONNOR
Treasurer JOHN L. THORNDIKE
Director, Fiduciary Company
THOMAS OTIS Incorporated
Secretary
JACK L. TREYNOR
Investment Adviser and
Consultant
--------------------------------------------------------------
GOVERNMENT OFFICERS TRUSTEES
OBLIGATIONS
PORTFOLIO M. DOZIER GARDNER
24 Federal Street President, Trustee DONALD R. DWIGHT
Boston, MA 02110 President, Dwight Partners, Inc.
JAMES B. HAWKES Chairman, Newspapers of
Vice President, Trustee New England, Inc.
SUSAN SCHIFF SAMUEL L. HAYES, III
Vice President and Jacob H. Schiff Professor of
Portfolio Manager Investment Banking, Harvard
University Graduate School of
MARK S. VENEZIA Business Administration
Vice President
NORTON H. REAMER
WILLIAM CHRISHOLM President and Director,
Vice President United Asset Management
Corporation
RAYMOND O'NEILL
Vice President JOHN L. THORNDIKE
Director, Fiduciary Company
MICHEL NORMANDEAU Incorporated
Vice President
JACK L. TREYNOR
JAMES L. O'CONNOR Investment Adviser and
Treasurer Consultant
THOMAS OTIS
Secretary
</TABLE>
<PAGE>
INVESTMENT ADVISER OF
GOVERNMENT OBLIGATIONS PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV CLASSIC
GOVERNMENT OBLIGATIONS FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
89 South Street
P.O. Box 1537
Boston, MA 02205-1537
TRANSFER AGENT
First Data Investor Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
EV CLASSIC GOVERNMENT
OBLIGATIONS FUND
24 FEDERAL STREET
BOSTON, MA 02110
C-GOSRC-8/96
[LOGO]
[graphic omitted: flag & U.S. Capitol]
EV Classic
Government Obligations
Fund
Semi-Annual Shareholder Report
June 30, 1996
